How Great Entrepreneurs Think

Here's an article about a wonderful new study, detailing how great entrepreneurs think. Lots of material here with implications for education.

"Sarasvathy (the researcher) concluded that master entrepreneurs rely on what she calls effectual reasoning. Brilliant improvisers, the entrepreneurs don't start out with concrete goals. Instead, they constantly assess how to use their personal strengths and whatever resources they have at hand to develop goals on the fly, while creatively reacting to contingencies...This is not say entrepreneurs don't have goals, only that those goals are broad and--like luggage--may shift during flight."

Here are some of their attitudes: "I don't believe in market research. Instead of asking all the questions, I'd try and make some sales."

"Ultimately, the best test of any product is to go to your target market and pretend like it's a real business."

"I always live by  the motto 'Ready, fire, aim.' I think if you spend too much time doing "ready, aim, aim, aim," you're never going to see all the good things that would happen if you actually started doing it. I think business plans are interesting, but they have no real meaning, because you can't put in all the positive things that will occur...if you know intrinsincally that this is possible, you just have to find out how to make it possible, which you can't do ahead of time."

Ah, here's the creator coming out in them: "if you know intrinsically that this is possible" - these people get an idea that some product or service would be valuable and then they find a way to make it work. They use their own creativity and independent judgment to determine whether something it's valuable.

One of the reasons even the best of market research doesn't always work is that people often don't know what they want or need, or whether they will like a product until they actually try it - especially something really new. Research shows that a small number of people accept a new product right away, but most take a while.

I suspect great entrepreneurs are at least intuitively aware of this, which is why they focus on getting the product out to market and selling it as soon as possible - let people try it, see if/that they like it, then spread the word.

What are the implications for education? Students need encouragement to try new things, to dare to come up with original combinations, and most of all, to rely on their own judgment. They need problems to solve with open-ended possibilities, not test answers.


Hattip John Enright via Tyler Cowen